Budget 2007
Van benefit and van fuel charges
From 6 April 2007
- van benefit charge increases to £3,000;
- the new van fuel benefit charge is £500.
Tax codes have now been issued for the new tax year, and unless we have been notified of a change in circumstances employees whose code previously included van benefit charge will be given a tax code including the increased van benefit charge and the new van fuel benefit charge.
As a result employees who are van users may see an increase in their tax bills in April. This increase will be correct, unless the employee does not use the van for private journeys other than journeys to and from work. If that’s the case, the tax code may need to be reviewed.
Reduction for cars capable of running on E85 fuel
From 6 April 2008 cars capable of running on E85 fuel (petrol mixed with
up to
85% bioethanol) will receive a 2% reduction from the appropriate percentage
for an equivalent petrol-only car.
For 2008-09 onwards employers should use the letter ‘G’ for these cars on forms P46(Car)(New), P11D and P11D working sheet 2. As with other reductions, this will not apply to QUALECs (cars with CO2 emissions of exactly 120 or less).
For 2007-08 only, the cars will need to be shown as letter ‘P’ on the above forms because letter ‘G’ will not be available until 2008-09.
Car fuel benefit
The multiplier remains at £14,400 for 2007-08. (Since April 2003, the fuel benefit charge has been calculated by applying the company car tax appropriate percentage to a set figure known as the ‘multiplier’.)
Managed Service Companies (MSCs) (PDF 52K)
Tax code notifications
Tax code changes for 2007-08 will be sent as normal, up to 5 May 2007. They will not include any changes arising from the Budget.
On 6 May 2007 a special run of tax codes will be issued (inclusive of Budget changes) in order to help you distinguish them from normal day-to-day code changes.
To give you time to change your payroll to use the new tax tables, update your software package if you run a computerised payroll or load the updated Employer CD-ROM if you use the PAYE calculator; we are not going to issue any further tax code notifications until 27 May 2007. Notifications issued from 27 May 2007 will take account of changes announced in the Budget.
Employer – Financed Retirement Benefit Schemes – Provision of Non-Cash Benefits
The group of ‘excluded benefits’ will be expanded to include:
- continued provision by former employers of accommodation and related removal expenses
- welfare counselling
- recreational benefits
- annual parties and similar functions costing up to £150
- equipment for disabled former employees
- writing of wills costing up to £150
- benefits which were first provided on retirement before 6 April 1998
- benefits not covered above costing up to £100.
Exemptions will be backdated to take effect from 6 April 2006.
The Employment Income Manual contains further guidance on the employment income aspects of employer-financed retirement benefit schemes, including the position prior to 6 April 2006.
